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Are you looking for a way to finance your next car project? It might not be easy to choose due to the many financing options, but you’d have the best chances of financing your car purchase with a car loan. Car loan requirements for the UK are similar to every car finance company. To be eligible, you must already be of legal age, a legal resident of the UK, have a high credit score, and have a stable employment record. Getting approved for a car loan in the UK is becoming more popular among its residents. The increase in car loan applications is mainly due to the accessibility and affordability of the loans offered. Many UK residents find it easier to pay their loan interests than to save up years’ worth of salary to afford a car. You could get a car loan online or in person from any agents of private loan companies or authorized car dealerships. Also read our guide on how to buy a car in the UK as a foreigner. Can a foreigner get a car loan in the UK? Foreigners can get a car loan in the UK, but they must pass additional requirements. Legal documents such as passports, salary slips, and certificates of employment are among the requirements foreigners have to prepare for a car loan in the UK. However, if you moved into the UK and have only been staying for a few months, you’ll have a meager chance of getting a car loan. The low possibility of approval is due to the practice of most lenders, where they would require you to provide documents such as proof of residence, and credit score which is only available after you’ve been a UK resident for many months or years. Even if you increase your credit score as a foreigner, car loan companies will check with several Credit Reference Agencies before they assess your application. Do you have international driving licence and want to buy a car in the UK? https://russianvagabond.com/buying-a-car-in-the-uk-with-an-international-driving-license/ Credit score in the UK Unfortunately, you cannot transfer your credit score from one country to another when you change residency because every country has credit standards and regulations. That is why your personal and financial background will be checked thoroughly by Credit Reference Agencies. These Credit Reference Agencies would forward relevant information such as your Registration in the Electoral Roll, Proof of Payment from previous transactions using any credit card, your credit limits in your original country, and even the transaction histories of your previous bank accounts. Aside from the long list of documents you have to submit, you would also have to wait for the Credit Reference Agencies to process your documents and forward them to the car loan company you’re applying to. So if you’re a foreigner and want a car loan, you should immediately prepare your financial documents and try to increase your credit score. Also, try to live in the UK for a few years before applying. By doing so, you’re growing your approval chances, and you’d also save time, energy, and money from going back and forth to car loan companies to submit and verify your documents. Improve your credit score To improve your credit score as a foreigner in the UK, you could immediately open any UK bank account and sign up for your first credit card. You could make several credit payments and pay them back in time to build your score. See which banks open accounts for foreigners and non-residents. For example, you could pay utility bills and groceries using credit and track your report to see how much you still need to spend to improve your score. Most foreigners also tap other permanent UK citizens with an impressive credit score as their co-applicant or co-signatory in their car loan application. You could negotiate with your co-signatory whether they’d share in the payments, or you’ll shoulder everything and only need their credibility. However, you should check with your car loan company if they’re allowing co-signers on their loan applications. Also read this guide on how to buy a car in the UK as a foreigner. https://russianvagabond.com/can-a-foreigner-buy-a-car-in-the-uk/ What do you need to qualify for a car loan in the UK? There are three main requirements to be eligible for a car loan in the UK. First, you must be a permanent legal UK resident at least 21 or over. Second, you have to get your driver’s license, and lastly, you have to get a stable job. Hence, the requirements are as follows: Age of least 21 and older Driver’s license Job in the UK Income of at least £20,000 per annual Deposit of about 10-20% of the car’s total value However, due to the increase in car loan applications, many car loan companies in the UK now require applicants to complete additional steps to evaluate their financial capacity to pay. Most car loan companies use an applicant’s financial background as a basis for the assessment of car loan applications. Many companies will give you a good loan deal if you have an excellent monthly income and a record of paying your debts and other expenses on time. These deals include a low-interest rate on repayments with a longer payment window. Generally, an annual income of at least £20,000 is a requirement for car loan companies. However, even if you research that income level, you’d still undergo credit checks and submit a list of your recent payments, expenses, or transactions as part of your application. While it might be a hassle to prepare everything yourself, you can get a free quote from most car loan companies nowadays. You could try inputting information on an online eligibility checker to see which requirements you’re missing and which deals you’re qualified for. Don’t worry. These checkers won’t affect your credit reports nor decrease your credit score! Aside from your personal and financial information, remember to prepare a down payment or a deposit. Most deposits are around 10-20% of the car’s total value, but there are car loan companies who are willing to fund up to 100% if you have a good credit score. Remember that criminal records, proof of bankruptcy, county court judgment for debts, or Individual Voluntary agreements to any creditor, would almost always lead you to reject your car loan application. How does car finance work in the UK? Car finance in the UK works similarly to typical personal loans. Many UK residents are starting to apply for these loans because it’s the most convenient and affordable option to finance their car purchases. In hindsight, these car loans differ in the amount a company would lend you and the repayment plan you’d commit to. Aside from car loans, another option you could use to finance your car purchase in the UK is through Hire Purchase, which lets you purchase a car without a deposit, and you would make monthly payments based on the spread of the car’s value. But, the catch here in this option is that you won’t own the vehicle until you finish the payment. Check out the cheapest car insurance in the UK. The process of getting a loan in the UK Applying for loans from credit companies in the UK offers a quick and easy solution for people who want to buy their first car or upgrade to a new model. Applying for a car loan is as simple as filling out your job application. However, many applications wait for a decision or try to complete the additional requirements. You can get a loan in the UK by following these steps: Apply online or at the bank's branch Submit all required documents Get a decision from the bank Sign the loan contract Purchase your new car at the dealership of your choice Generally, people start their car loan application by submitting a request or an application form to the lender. Many lending companies give their decision within 24 hours if you submit the complete set of requirements within the typical business hours of 9 am to 5 pm. Some companies even offer their decision in minutes if you’re among the early batch of applicants qualified for promos and deals. Underwriters and credit checkers from lending companies don’t automatically approve applications, even if they come with a complete set of requirements. If your financial status doesn’t reach their standard, the company might require more information from you or have you sign a series of legal contracts. In the event of a rejection, lending companies generally give instructions on how you could proceed, should you wish to re-apply. Some companies allow you to re-apply immediately, but some recommend you build up your credit score or increase your income. Remember to check with the lending company why they rejected your application and seek their advice on how to remedy it. On the other hand, once your loan application gets accepted, the company will send an e-mail or deliver a physical copy of the loan contract. It’s essential to have a copy of the agreement, and if there are terms that confuse you, consult a legal professional immediately before signing. You should receive a document with the contract containing the company’s terms and conditions, product details, and other relevant legal provisions. Once you have read, understood, and signed the loan contract, the company will process your loan and update you on the estimated timeline regarding the release of funds. In some cases, the car loan company directly coordinates with the dealership you’re purchasing from, and they’d pay on your behalf if you authorize them to do so. Additionally, you could provide your preferred bank account, and the loan company will transfer the funds securely. https://russianvagabond.com/how-to-buy-a-car-for-export-in-the-uk/